Investor Purchases Drop to 16% of Transactions in Q1 2026

Investor purchases accounted for 16% of U.S. home transactions in the first quarter of 2026, down from 18% a year earlier and a peak of 22% in 2022, according to a Redfin analysis published Monday. The shift reflects reduced activity from large institutional buyers, higher financing costs for small investors, and narrowing margins on both flip and rental strategies.

Institutional activity has contracted most sharply. Single-family rental REITs Invitation Homes and AMH reported combined net acquisitions of approximately 2,400 homes in 2025, versus 9,600 in 2022. Invitation Homes said in its February earnings call it continues to view opportunity as "selective" given cap rates of 5.8% on new acquisitions falling below the firm's weighted average cost of capital.

Small and medium investors, defined as those owning 10 or fewer properties, still accounted for 77% of total investor purchase volume in the quarter. CoreLogic attributed the category's relative resilience to all-cash purchases. Roughly 68% of small-investor transactions were completed without financing, compared with 12% of owner-occupant purchases.

"The calculus on leveraged rentals has gotten considerably more difficult," said Daryl Fairweather, chief economist at Redfin. Fairweather noted that a typical single-family rental acquired with a DSCR loan in 2021 generated roughly $300 monthly cash flow after expenses, compared with roughly $80 for an equivalent property acquired today at current rates and pricing.

Flipping activity has also softened. ATTOM Data Solutions reported 62,000 single-family home and condo flips completed in Q1, down 22% year-over-year. The average gross profit on a flip fell to $62,700, with median margin hitting 22.6%, the lowest reading since 2009.

Regional data showed the Midwest remained the most attractive market for small investors. Cleveland, Indianapolis, Pittsburgh, and St. Louis all posted investor purchase shares above 22%. Florida markets, in contrast, saw sharp declines. Miami investor share dropped to 14% from 24% two years earlier as insurance costs and condo-association pressures weighed on returns.

Realtor.com reported that investor listing activity remained elevated. Investors listed 54,800 properties for sale in March, up 9% year-over-year, suggesting a portion of the pullback reflects net selling rather than just slower buying. RealPage's forecast for 2026 expects investor purchase share to stabilize between 15% and 17%, gradually recovering as interest rates decline.